The return on a bond investment comes from three sources: Interest payments, realized capital gains and accrued capital gains. We provide an exact description on how the capital gains can be measured under a variety of accounting rules for measuring accruals and study the theoretical properties of such rules, their taxation consequences and the relation between the yield before tax and the yiel...

The Taxpayer Relief Act of 1997 (TRA97) significantly changed the tax treatment of housing capital gains in the United States. Before 1997, homeowners were subject to capital gains taxation when they sold their houses unless they purchased replacement homes of equal or greater value. Since 1997, homeowners can exclude capital gains of $500,000 (or $250,000 for single filers) when they sell thei...

The paper lays out a simple model of business income taxation that includes the taxation of asset capital gains. The concepts of tax distorted and undistorted user costs of capital are also defined. The tax distorted user cost differs from its undistorted counterpart by two distortion terms. The first distortion term is associated with the fact that the imputed interest cost of equity capital c...

Taxes have major costs beyond the collected revenue: deadweight from distorted incentives, compliance and enforcement costs, etc. A simple market mechanism, the Equity Tax, avoids these problems for the trickiest cases: corporate, dividend, and capital gains taxes. It exploits the ability of the share prices to reflect the expected true annual return (as perceived by investors, not as defined b...

Taxes have major costs beyond the collected revenue: deadweight from distorted incentives, compliance and enforcement costs, etc. A simple market mechanism, the Equity Tax, avoids these problems for the trickiest cases: corporate, dividend, and capital gains taxes. It exploits the ability of the share prices to reflect the expected true annual return (as perceived by investors, not as defined b...

The first study for this dissertation develops a tax-adjusted cost-of-carry model for Australian stock index futures and estimates the value of the debt tax shield, cash dividends and imputation tax credits flowing from the basket stocks in the index. As discussed in the previous chapter, the study relaxes the assumption made in previous research that interest and dividends receive the same tax...

This paper analyzes how corporate capital gains taxes affect the capital gain realization decisions of firms. The paper outlines the tax treatment of corporate capital gains, the consequent incentives for firms with gains and losses, the efficiency consequences of these taxes in the context of other taxes and capital market distortions, and the response of firms to these incentives. Despite rec...